A Close Look at LEM
Investor Presentation, 28 August 2013

Agenda1. Introduction
2. Long Term Growth
3. Business Development Q1 of 2013/14
4. Executing LEM’s Strategy
5. Outlook2

Global Market Leader in Current and Voltage Transducers
Market Position

Performance

Perspectives

 Global market shareof 50%
 Benchmark in service
and product quality
 4 production sites inEurope and Asia
 Sales of CHF 235
and EBIT margin of
17.5% in 2012/13

 Continued sales
growth and margin
improvements
 19.2% average total
share-holder returnp.a. (03/2008 to08/2013)
 Dividend yield >5% ineach year since 2009

 Reinforced investment in innovation
 Solid growth perspectives due to underlying trends
 Strong foothold inChina
 EBIT margin target of
15 to 20%3

Diverse Target Markets – Diversified Businesses
Share of sales 2012/13

Cyclicality

Macro drivers

Green Cars
Conventional Cars

Consumer durables

Technology adoption
Fuel savings

Late cycle

Infrastructure investments

Mid cycle

Energy prices, subsidies

Early cycle

Industrial investment

15%

High precision
Traction
Renewable energies& power supplies

85%

Drives & welding

Automotive segment
Industry segment4Products and Applications
Industry segment
Drives & welding

Automotive segment
Conventional cars

Motor drives■ Welding■ Miscellaneous■■Renewable energies &power supplies
Solar■ Wind■ UPS■ Battery monitoring, processcontrol, energy metering■

Lead battery management■ Start-stop application

Green cars (HEV, EV)
Battery pack management■ Electric motor control■ Embedded charger■Traction
On-board applications■ Trackside■ Energy monitoring■High precision
Medical scanner■ Test & measurement■

5

LEM Applications: Elevator
223
BA LTSB LA 150-P1A

The controller moves the motor in the right
direction and lets it stop exactly at the rightposition to the floor ground, independent of
the weight in the elevator car. The current
transducers take care that the motor is
powered with the correct current.
Elevator doors are controlled by a control unitthat integrates the motors of the sliding
doors. The current transducer measures thecurrent in the motors to run the panels
smoothly and to discover if something (e.g., afinger, a leg) obstructs the doors.

1 Door control unit
2 Motor3 Controller

6LEM Applications: Start-Stop System for CarsA CABCD HAH3HC5AB

B
1B HABThe current sensors (HAB, CAB) allow thebattery management system to decide if
enough energy is available in the battery tooperate the accessories (such as airconditioning, headlights, and radio) while theengine is off, and still have ample charge left
to restart the engine.

5 C

2
3
41 Battery

D

The “power-control unit” will instruct the“starter generator” to restart the engine orrecharge the battery, as needed, and currentsensors (HC5, HAH3) used in the converters
and inverter modules allow it to operatesmoothly, improving the driver experience
while helping the environment.

2 Power control unit
3 Internal combustion engine
4 Starter generator
5 Rectifier

7

LEM Perceived as the Global Leader inCurrent and Voltage Transducers

2012 customer satisfaction survey conducted in all territories■ LEM rated as high as in a 2009 study■ LEM most valued for■ Focus on customer demands and requests■ Ease to work with
■ Trustworthiness■ Professionalism in solving issues■ Highest ratings for reliability, performance and quality of products

8Agenda1. Introduction2. Long Term Growth
3. Business Development Q1 of 2013/14
4. Executing LEM’s Strategy
5. Outlook9Sales Growth 1993/94 to 2012/13
In CHF millions

300250200

CAGR 10%15010050010
Comparable basis excluding the instruments business sold in 2004/05

* 15.3% operating margin before restructuring provisions of CHF 1.9m booked in Q4 of 2012/13
Q1 13/14

12.6%

Q4 12/13

Q3 12/13

Q2 12/13

Q1 12/13

Q4 11/12

Q3 11/12

Q2 11/12

Q1 11/12

Q4 10/11

Q3 10/11

Q2 10/11

Q1 10/11

Q4 09/10

Q3 09/10

Q2 09/10

Q1 09/10

Q4 08/09

Q3 08/09

Q2 08/09

Q1 08/09

Q4 07/08

Q3 07/08

Q2 07/08

Q1 07/08

Q4 06/07

Q3 06/07

Q2 06/07

Q1 06/07

Q4 05/06

Q3 05/06

Q2 05/06

Q1 05/06

Q4 04/05

Q3 04/05

Q2 04/05

Q1 04/05

EBIT Margin Development
Operational EBIT in % of sales

25%

20%

15%

EBIT
margintarget

*10%

8.9%

5.9%
5%
11

Free Cashflow, Net Earnings
In CHF millions

40353025
Free Cashflow

20

Net earnings
1510
50
2004/05

2005/06

2006/07

2007/08

2008/09

2009/102010/112011/122012/13

12Shareholder Return from 2004/05 to 2012/13
LEM returned CHF 213.1 million toshareholders

Market capitalization increased fromCHF 92.6 million to CHF 671.5 million

Cash returned to shareholders

Market capitalization per 31 March

In CHF millions
50In CHF millions
700

45600

40500

3530400

25300

2015200

10100

50013Dividend

Share buy backPar value reduction

Agenda1. Introduction
2. Long Term Growth
3. Business Development Q1 of 2013/14
4. Executing LEM’s Strategy
5. Outlook

14Performance in Q1 of 2013/14
In CHF million,%

Q1 2013/14

Q42012/13*

Q1 vs. Q4Orders65.1

58.7+10.8%

Sales

61.8

55.8

+10.8%

Book-to-bill ratio

1.05

1.05

-

Gross margin

45.4%

37.6%

+7.8%pt

-14.8

-14.4

in % of sales-23.9%

25.8%

+2.8%
-R&D expense

3.9

3.9

in % of sales

6.3%

7.1%

-

13.3

6.6+101.3%

EBIT margin

21.5%

11.8%

-Net earnings

9.8

3.9+147.8%

Operating expense

EBIT* Q4 including CHF 1.9m restructuring provisions. Theoretical numbers without this impact: gross margin 41.1%, EBIT 8.5m / 15.3%

15Industry Segment: Regional MarketsEuropeIn CHF million, %Sales

Q1 vs. Q4

Europe23.3-3.8%

N. America

7.4+14.7%

Asia and ROW

22.7+34.9%

Total

53.5+12.4%

North America
Asia and ROW

42%

44%

 European business still weak
 Double digit growth in Asia and NorthAmerica
 China remains #1 Industry market
14%16

Industry Segment: Business Development
Businesses and Applications
In CHF millions

Op. EBIT in % of sales
25280

240

20200
15160

120

10Drives & welding (growth QoQ: +13%)
 Contribution from all regions
 Growth and market share increase in China
Renewable energies & power supplies (+31%)
 Seasonal effect in solar business Renewables markets in China an Japanbenefitting from government subsidies
 Consolidation in solar and wind markets
Traction (-14%)
 Delays of projects
 Restrained investments in rail infrastructure

80
540

00
09/10

10/11

11/12

12/13

Q1 13/14

High-precision (+6%)
 Increased market share in US medicalapplications
17

Automotive Segment: Regional Markets
EuropeIn CHF million, %Sales

Q1 vs. Q4

Europe0.5-37.3%

N. America

4.6+5.1%

Asia and ROW

3.1+7.6%

Total

8.3+1.5%

North AmericaAsia and ROW

7%

37%

Conventional cars business driving
performance Focus on Asian and North Americanmarkets
 Customers’ inventory corrections,mainly in the US


56%

18

Automotive Segment: Business Development
In CHF millions

Op. EBIT in % of sales
25

30
25

20

20
15
15
10

10

5

5Businesses and Applications
Conventional cars (growth QoQ: +8%)
 Growth in battery management
application
 Ramp-up of LEM’s new start-stopapplication faster than expectedGreen cars (HEV, EV) (-32%)
 Market burdened by high vehicle
prices Continued technological hurdles
 Limited success of electrical cars

009/10

10/11

11/12

12/13

Q1 13/14

0-5-10-15-5-1019Business Development ChinaProductionSales■■■Market share of over 50%
Market share increase in somedrives & welding applications
Biggest market with 24% of totalsales■■

LEM China expands its #1 position aslargest manufacturing site of the Group(56% of total production, compared to51% in financial year 2012/13)“Made by LEM” quality

In CHF millions

In CHF millions
60

12050100

40803060

2040

1020

009/10

10/11

11/12

12/13

Q1 13/14

009/1010/11

11/12

12/13

Q1 13/1420

Agenda1. Introduction
2. Long Term Growth
3. Business Development Q1 of 2013/14
4. Executing LEM’s Strategy
5. Outlook

21

Market Factors and Strategy■ We firmly believe in our strategic
direction and the 4 drivers for ourbusiness remain unchanged■ We will continue to capitalize on
the drivers of LEM’s markets
through pure play components company
 diversification across geographiesand markets

22

Executing Strategy: Increase Technology Leadership

Key strategic initiative■■■■Reinforce multidisciplinary innovation team
Increase number of product launches
Constantly improve performance ofproducts
Establish dedicated team of experts tomanage LEM’s IPAchievements 2012/13■■■

Increased investment in R&D
Launched 8 new products, secured 11new patents
Established LEM IP in Fribourg23

Product Launches 2012/13 (1/2)
CAB

HAH3 DRHC 20HLSR

 Digital bus output and embedded microcontroller
 Highest accuracy for battery monitoring application
 State of charge measurement for hybrid vehicles

Automotive

 Customer specific transducer
 Communication with microcontroller / serial interface
 Adapted for tri-phase machine for HEV and EV

Automotive High current range: 1’000 to 2’000 A
 Small size Designed for battery monitoring in conventional cars

Automotive New ASIC with twice improved accuracy
 Very cost effective with new design Designed for drives and solar market

Industry24

Product Launches 2012/13 (2/2)
HO New ASIC with twice improved accuracy New functionalities: over-current detection,
stand-by mode
 First programmable transducer

DVL New technology to create a digital isolation
 Improved sensitivity to external magnetic fields
 Robust design for harsh environments intraction applications

HFWS
confidential

LA130-150

 Customer specific transducer
 Communication with microcontroller andserial interface
 Very small size for the current measured
 Design for cost to replace older versions
 Proven technology based on closed loop hall Designed for industrial applications

Industry

Industry

Industry

Industry
25

Executing Strategy: Increase Efficiency
OPEX in % of Sales
35%

Key strategic initiative

30%

■

25%

■

Improve product cost through low costsourcing and manufacturing
Reduce complexity of organization

20%

15%

Achievements 2012/13■10%■

Centralized high precision business inGeneva
Establish LEM Bulgaria

5%0%

26

Executing Strategy: Increase Production Flexibility
EBIT in % of Sales
25%

Key strategic initiative■20%■

Develop systems to better forecast
demand fluctuations
Improve supply chain management

Achievements 2012/13

15%

■
■

Improved S&OP
Improvements in cycle management10%

Q1 04/05
Q3 04/05
Q1 05/06
Q3 05/06
Q1 06/07
Q3 06/07
Q1 07/08
Q3 07/08
Q1 08/09
Q3 08/09
Q1 09/10
Q3 09/10
Q1 10/11
Q3 10/11
Q1 11/12
Q3 11/12
Q1 12/13
Q3 12/13
Q1 13/145%27

Agenda1. Introduction
2. Long Term Growth
3. Business Development Q1 of 2013/14
4. Executing LEM’s Strategy
5. Outlook

28

Outlook■

Economic climate expected to remain volatile■For 2013/14 we expect■ Industry segment: progressive restart of sales in North
America and Asia, Europe to remain weak
■ Automotive segment: continued growth■

After a strong Q1 of 2013/14, we observe a stabilization of thebusiness at the current level■

Further implementation of key strategic initiatives■Operating margins to remain within target range of 15 to 20%

29

Financial Calendar and Contact Details
Financial calendar
13 November 2013 Half-year results of 2013/14
18 February 2014 Third quarter results of 2013/14
4 June 2014
Year-end results and media and analyst conference
26 June 2014
Ordinary shareholders’ meeting for the year 2013/14
1 July 2014
Dividend ex-date
4 July 2014
Dividend payment date

For further information
Julius Renk, CFO
Tel: +41 22 706 12 50
Email: investor@lem.com

30

Shareholder Structure per 31.3.2013
Other
25.5%
LEM Board &Management
1.0%*
Amerprise FinancialInc./Threadneedle
3.4%
Erwin Studer andJoraem de Chavonay
4.1%

Werner O. Weber &Ueli Wampfler
39.3%**Montanaro AssetManagement
6.1%
SarasinInvestmentfonds AG
7.9%* Excludes shareholdings of Ueli Wampfler

Ruth Wertheimer /7-Industries Holding
12.7%** Opting out clause introduced in LEM’s articles ofincorporation by the shareholders' meeting on
25 June 201031